Can a lawyer sell or assign a client's unpaid fee account to a third party after the legal work is finished?

Plain-English summary

A lawyer asked whether there is any ethical prohibition against assigning an account receivable from a client to a third party after the professional services have been rendered and all that remains is collecting the funds owed. The committee assumed the services were complete and the fee fixed and agreed upon.

The committee noted that assigning a fee receivable raises concerns about the confidential lawyer-client relationship, including the client's need for legal services and the amount owed, and that it could create problems under Ethical Consideration 2-23, which says a lawyer should not sue a client for a fee unless necessary to prevent fraud or gross imposition. Even so, the Code did not prohibit assigning such receivables. The committee concluded the assignment is ethically appropriate if (1) the client is fully informed of the proposed assignment and agrees to it and to paying the designated assignee, and (2) the assignment is limited by agreement so that, on the client's default, only the lawyer may initiate or authorize suit to collect. The client's agreement was a sufficient waiver of confidentiality and other objections, and the limit on suing addressed the EC 2-23 concern. The committee expressed no opinion on assignments made without the client's knowledge and consent.

Currency note

This opinion was issued in 1973, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. It applied the former Code of Professional Responsibility, which has since been replaced. Treat this page as historical context, not current guidance. Verify against current Rules 4-1.5 and 4-1.6 before relying on any specific requirement mentioned here.

Common questions

Q: Could a lawyer assign a client's unpaid fee account to a third party?

A: Under this opinion, yes, but only after the work was complete and only with the client's informed consent to the assignment and to paying the assignee.

Q: Why did the assignment require the client's consent?

A: The committee reasoned that an assignment exposes confidential matters such as the client's need for legal services and the fee owed, so the client's agreement was needed as a waiver of confidentiality.

Q: Could the assignee sue the client directly on default?

A: No. The committee required that the assignment be limited so that, on default, only the lawyer could initiate or authorize a suit to collect, which addressed the concern in EC 2-23 about suing clients for fees.

Background and rules framework

The opinion applied DR 4-101 (preservation of client confidences) and Ethical Consideration 2-23 (a lawyer should not sue a client for a fee except to prevent fraud or gross imposition) of the former Code of Professional Responsibility. In current Florida practice the confidentiality duty corresponds to Rule 4-1.6 and the fee principles to Rule 4-1.5; the Model Rule analogues are Rules 1.6 and 1.5.

Citations and references

Rules of Professional Conduct:

• CPR EC 2-23 (suing a client for a fee); DR 4-101 (preservation of confidences)

See also

• FL Bar Ethics Op. 81-3: Collection Agency for Delinquent Legal Fees
• FL Bar Ethics Op. 82-2: Trust Funds Applied to a Fee Claim
• FL Bar Ethics Op. 86-2: Interest on Unpaid Fees and Costs

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-72-43/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-72-43-1-2.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

FLORIDA BAR ETHICS OPINION
OPINION 72-43
February 23, 1973
Advisory ethics opinions are not binding.
A lawyer may assign to a third party an account receivable representing professional fees as long as the client consents and the assignment limits to the lawyer the right to sue in the event of default.
CPR: EC 2-23, DR 4-101
Vice Chairman Zehmer stated the opinion of the committee:
The inquiring attorney poses the following simple question:
Is there any ethical prohibition against an attorney assigning an account receivable from one client to a third party after his professional services have been rendered and all that remains is collection of the client's funds owing for the professional services rendered?
For purposes of this inquiry, the Committee assumes that the professional services have been completed and the fee fixed and agreed upon.
The assignment of a receivable representing a fee for professional services immediately raises concern about the confidential relationship between lawyer and client, including such confidential matters as the client's need for legal services and amount of the fee owed for such services. Such assignment also poses ethical problems should the client fail to make the required payments to the assignee in view of the admonition in EC 2-23 that a lawyer "should not sue a client for a fee unless necessary to prevent fraud or gross imposition by the client."
However, the CPR does not prohibit the assignment of receivables representing professional fees. Therefore, keeping in mind that potential ethical problems exist, the Committee concludes that assignment of such receivables is ethically appropriate provided (1) the client is fully informed of the proposed assignment by his lawyer, and agrees to such assignment and making payment to the designated assignee; and (2) the assignment is limited by agreement of the lawyer and the assignee so that, in the event of default by the client, only the lawyer may initiate or authorize suit to collect the amount owed by the client.
The client's agreement is a sufficient waiver of confidentiality and other objections to the assignment. The limitation on the right to initiate suit obviates problems under EC 2-23.
The Committee does not express any opinion on the ethical propriety of an assignment of receivables from a client if the client does not have knowledge of and consent to such assignment.